July 5, 2019 / 7:45 PM / a year ago

EMERGING MARKETS-Latam FX fall as dollar rallies on dimmer hopes of aggressive U.S. rate cut

 (Updates prices)
    By Susan Mathew
    July 5 (Reuters) - Most Latin American currencies slipped on
Friday as the dollar was lifted by hopes that the U.S. Federal
Reserve would not cut rates aggressively at its meeting this
    The dollar rally was spurred by investors trimming bets of a
50-basis-point cut in U.S interest rates in July after data
showed that U.S. jobs growth in June beat expectations strongly
to the upside.
    Regional currencies lost between 0.03% to 0.7%, with
Brazil's real slipping from three-month highs hit last
session, as the dollar climbed 0.5%.
    But, tepid wage growth in the United States over the same
period kept alive bets of a quarter-basis-point cut.
    "It (jobs data) reduces the scope for a 50bp cut this month,
though does little to alter the easing narrative linked to the
Fed," strategists at TD Securities wrote in a note. 
    Riskier assets such as those in emerging markets have been
rising since last month on hopes of accommodative monetary
policy by major central banks, and signs of progress in
U.S.-China trade relations.
    Brazil's real fell 0.4% after a strong rally on Thursday
spurred by the government's pension reform bill clearing a key
congressional hurdle, which paved the way for it to be put to a
lower house plenary vote before the parliament breaks for
    On the week, the currency was on course for a 0.8% gain,
reversing last week's decline. 
    Mexico's peso was flat, and was set to clock weekly
gains of around 1.2%. A 0.7% drop in Chile's peso led
losses in the region on Friday, followed by the Colombian
currency's 0.6% dip.
    Stocks in the region were mixed. Brazil shares rose
0.3% to hit fresh highs. Airline Gol Linhas Aereas Inteligentes
 topped the Bovespa index after reporting a 6.5% rise
in demand for flights in June. 
    Mexican shares dipped 0.1%, in line with U.S. stocks
that declined after the jobs data. 
    In Argentina, both stocks and the currency
climbed. According to a preliminary draft of the government's
upcoming budget proposal, inflation should end 2019 under 40.3%
while the economy shrinks 0.8%.
    Latin America's No. 3 economy has been hammered by recession
and inflation of more than 57 percent over the last 12 months.
    On Friday, the International Monetary Fund said it has
completed its fourth review of the country and is set to
disburse $5.4 billion to the government as per a standby credit

    Key Latin American stock indexes and currencies at 1930 GMT:
    Stock indexes             Latest    Daily %
 MSCI Emerging Markets         1059.33      -0.5
 MSCI LatAm                    2911.75      -0.3
 Brazil Bovespa              103968.38      0.32
 Mexico IPC                   43396.60     -0.14
 Chile IPSA                    5057.13      0.04
 Argentina MerVal             41797.12      1.01
 Colombia IGBC                12834.52      0.71
       Currencies             Latest    Daily %
 Brazil real                    3.8165     -0.48
 Mexico peso                   19.0129     -0.08
 Chile peso                     683.36     -0.64
 Colombia peso                 3207.18     -0.56
 Peru sol                         3.29      0.03
 Argentina peso                41.7950      0.49

 (Reporting by Susan Mathew in Bengaluru; editing by Jonathan
Nuestros Estándares:Los principios Thomson Reuters
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